Military-Business Alliances in Egypt Before and After 30 June: Interview with Wael Gamal

[Please find both the Arabic video and an English translated transcription below.]

I had the pleasure of conducting this interview with Wael Gamal, one of the more reliable and informed journalists who addresses critically political-economic variables in Egypt. In this interview, Wael addresses the less discussed dire social and economic situation that spurred the 30 June protests and the immediate aftermath, first under the rule of the Muslim Brotherhood and recently under an anti-Brotherhood loose coalition that is unfolding at the moment. Paramount in this interview is the role of military-business relations and prospects for change in social and economic policies in light of seemingly increasing influence of big capital.

The caveat that Wael repeatedly refers to involves the wider opportunity now available for various social forces to exert pressure on government and confront elitist economic policies. Yet, it is not a struggle whose outcome can be determined in advance. Wael addresses a number of indicators to watch for as the new government is formed, and as the battle for guiding Egypt`s political economy unfolds in relation to economic policies, IMF loans and "packages," and the management of subsidies.

Wael recounts significant factors that augmented resentment against the Brotherhood during the two years after the ousting of Mubarak, and treats this resentment and opposition as a force that is likely to pressure whatver current government and alliances are formed in the direction of asserting the demands for social and economic rights for wide sectors of the population. He identifies significant and strategic relations between the military and big business in current potential ruling formulas, but does not discount the ability of the non-fuloul segments of the protest movement to push forth with its basic demands.

Wael Gamalis an Egyptian journalist at al-Shurouq newspaper in Cairo. He has written extensively on Egypt`s politics and society, with an emphasis on political economy.

The interview was conducted in Arabic, is divided into two parts, and can be watched below. Please note that the video was edited by the author. An English translated trancription is provided below the videos.

BH: There has been a lot of talk about developments in Egypt. We would like to speak with you about the socioeconomic issues in Egypt prior to 30 June. What were the effects of the economic situation on the campaigns that were mobilized? This perspective has received short shrift thus far. So if we can start with this, we can then move on to other topics.

WG: I believe that this was one of the determining factors in the lead up to 30 June in Egypt. When we look at the figures of social and economic protests prior to the overthrow of Morsi, the Egyptian leadership—and by this I mean it was done via an official statement—placed the number of social protests—what some call parochial protests—in the period between Morsi’s election and approximately the beginning of June [2013] at 7700 protests. This means that there was an immense momentum of social and economic protests, and it cannot be said to have been mobilized by the forces of opposition, not even the leftists or revolutionary forces. This was a contingent matter. People were struggling in a localized and immediate manner over social and economic issues.

From my perspective, this was justified. The ruling coalition that Dr. Morsi presided over—or rather, that Dr. Morsi was the presidential symbol of even if he was an elected president—was an alliance between forces of the old state in Egypt—which includes the military, as we should not forget that the current minister of defense was himself appointed by President Morsi—and various businessmen—among whom were men of the former regime. […] This is what we call a real coup, a coup in socioeconomic policies. The rule of the Muslim Brotherhood was a reign during which there was a coup against the socioeconomic demands of the January 25 Revolution. It was not only a coup in the constitutional and political realms, and that of the distribution of authority. It was also a coup in the distribution of wealth, which is at the heart of social and economic policies in place. This is why it made sense that we witnessed the expansion of Qualified Industrial Zones (QIZs) with Israel, as well as the increase of both internal and external debt.

We also witnessed an extremely fierce attack on all social protests. In the lead to 30 June, there was a desire to further criminalize—through increasing the punishment for—strikes, road closures, and other acts so as to confront this wave of protest. There was also a dramatic increase in prices as a result of the devaluation of the Egyptian pound, which created a lot of pressure on the poorer classes. Furthermore, there was an increase in the unemployment rate. [Bad connection.] All of this [bad connection] there was broad-based and popular anger among many that mobilized.

[Brief interruption by Bassam Haddad to ask for a repetition due to bad connection.]

There was an increase in the unemployment rate, which official estimates placed at thirteen percent. Together with the increase in prices, and with not delivering on the redistribution of wealth, there was a rehearsing of the rhetoric of impovrishing the Egyptian people so as to deal with the economic crisis. In the particular case of the poor, there was the implementation of a series of indirect taxes that affected them. Along with the prosecution and further criminalization of social protest, all of this created real, popular, and broad-based resentment that neither the opposition nor the army should be credited with, contrary to what some are saying.

This is why I believe the military, along with others in the ruling coalition, reconsidered the existing alliance. An important part of the discussions with the Muslims Brotherhood—from day one of the January 25 Revolution—was their alleged ability to get people off the streets. This strategy proved a failure after President Morsi came to power, and it appeared there was an impending explosion. In my estimation, there was a plan between the Armed Forces and some political forces in the opposition. This plan, however, was not what created the 30 June uprising. What created this uprising were socioeconomic factors, along with genuine anger in the street. There was also a degree of denial and fabrication on the part of the Freedom and Justice Party (FJP) that further intensified this anger.

BH: Before we discuss the formal political issues, can we address the presence of serious social and economic challenges that will have to be confronted regardless of who is in power? There seems to be a dearth of serious discussion about such factors, which could potentially cripple anyone that comes to power. There also seems to be little in the writing on Egypt that is addressing this dynamic. Can you share with us your outlook in this regard, particularly with respect to the coming months and years?

WG: You are absolutely correct. The economic aspects are not discussed except so as to create political pressure on social and political movements. Since the January 25 Revolution, this rhetoric has been repeated through various means. We are constantly told that there is an impending economic disaster, that the country is on the verge of bankruptcy, that there is no place for mobilizations in the streets, and there is a need for a return to stability so as to attract foreign investors. The reality is that a genuine discussion about what the different available alternatives are is yet to take place. If occurred at all, it was on a very limited basis during the presidential elections. However, at the end of the day, it continues to be politicized in the manner it has been—because these are not technical questions open to individual decisions. These problems have been around for some time. The lack of stability has certainly aggravated the problems of production, foreign investment, tourism, and so forth. However, the majority of these problems existed under the old regime, and were inherited from the neoliberal project whose implementation was completed in the later years of Hosni Mubarak’s rule. This is the situation we are still dealing with.

The Muslim Brotherhood did not touch the foundational pillars that they inherited from the Mubark regime. There was in fact a contradiction in their rhetoric. On the one hand, they complained—and legitimately so—that the economic problems were inherited from the Mubarak regime, and thus people need to understand the situation as such. On the other hand, they greatly exaggerated what they called their economic successes so as to politically defend themselves. Thus their rhetoric was inconsistent. However, we have a fundamental problem with the issue of wealth distribution. There are some major businessmen and corporations—both domestic and international—that amassed a great amount of wealth in the last years of Mubarak’s rule. Nothing has been done with respect to this issue. This will continue to be a major issue irrespective of who comes to power.

Where does the political economy compass point to in the coming period? This depends on the social peace. This is why there are some that are stressing the importance of compromise by the economic elites—which are themselves the political elites—so as to decrease the anger in the streets. This is an existing voice, though it is not loud enough. The other voice is one—like businessman Naguib Sawiris’ al-Masr al-Youm article this past Thursday—that clearly states a need for a public and clear return to what was the case before 11 February 2011. In other words, Naguib Sawiris is calling on the new government to declare its allegiance to the free market and that there can be no retreating from it. He wants [the government] to declare that the priority is stability, and that it is therefore not the time for strikes. He calls for increased public-private sector partnerships, and for the new government to immediately sign the International Monetary Fund (IMF) loan agreement. He also wants the government to immediately end fuel subsidies. These, in my opinion, are the demands of those in control of the economy.

So even if the government has important unionists—like Kamal Abu Aytah in the Ministry of Labor, Ahmad al-Bor‘i who has a long history from before the revolution (and was the minister that attempted to issue a law that was favorable to independent union organizing), or even some of the social liberals—any attempt to address these issues is going to result in a confrontation within a balance of power which is not in favorable to these ministers unless they rely on the direct support of popular movements. However, I do not think something like that is very likely. We are still grappling with these questions. This is why people are in the streets, because these issues have not yet been resolved.

Any ruling coalition needs to buttress its rule through the support of some popular sector of society, especially after the revolution. The Muslim Brotherhood did not offer anything to the peasants, nor anything to the workers. Most importantly, the state budget and the tax policy continue to privilege the rich. Any attempt to change this has resulted in complete failure because of the balance of power. This is why I do not believe any real political or economic change is going to be possible without a political confrontation, or at the very least a government that is leaning and dependent on popular forces.

BH: There is a narrative about how the Muslim Brotherhood cooperated with significant parts of the old regime, including big business, and was therefore quite reactionary in this respect. However, there is another narrative about how the current relationship between the state and big business is either deeper than the pre-30 June period, or is likely to become deeper. What do you think about this, and what are the forces—whether from the Tamarod Movement or elsewhere—that can stand in the face of this, especially given the emerging three-way game between the Muslim Brotherhood, the remnants of the previous regime, and the social movement that is demanding fundamental change? In other words, how is this struggle going to play out, and who has the capacity to take charge of the situation? Perhaps you could start with comparing the Morsi government’s relationship with the business sector to that which is taking shape today, and then move on to the second part of the question.

WG: In my opinion, this is an issue that has more to do with internal dynamics rather than the ruling coalition. The government of the Muslim Brotherhood—which of course had within it elements of the former regime, most represented by the fact that most ministers were part of the pre-Brotherhood bureaucracy—took major steps to convince parts of the business sector to either join or at least not oppose the new ruling coalition, which was symbolically headed by President Morsi. However, in my own reading of the situation, there were portions of the business sector that were unwilling to do so. The Muslim Brotherhood thus had to confront these portions of the business community, partly to convince its cadres that the organization was taking on the former regime. Naguib Sawiris is one such individual. He waged a battle on the issue of taxes, which in my opinion was more a political battle than anything else. In turn, the Brotherhood targeted him and his brother, Nasif Sawiris, primarily as Copts and not as members of the business community—which was a strategic decision. However, this is also the government that approached Hussein Salem, who was Mubarak’s business partner and on the run, in order to establish détente with him. It was also this government that lifted the freeze on the assets of Rashid Muhammad Rashid, who was another minister on the run [hiding] in Qatar. So it was engaged in unofficial and nontransparent attempts at making peace with certain businessmen. This is why there was a ministerial decree issued almost immediately before Morsi’s fall to expand the prerogatives of the minister of investment. This was a means of making peace with businessmen over the issue of corruption. This was all happening without any legal accountability and without any transparency.

The fundamental problem facing any ruling coalition is how long it can hold together. This is the key issue. This particular coalition was ultimately not sustainable. It has been proven that some of those involved in the National Salvation Front (NSF) have no problem signing the IMF loan agreement, or the impoverishing policies that are in place. I call these people the children of Thatcher, and they were present on both sides. Their problem is a political one, it consists of the questions: What is my share of power? Am I with the military and the ruling coalition or on the other side? A part of this struggle is about respective shares of the pie, which even businessmen from within the Muslim Brotherhood began to demand in the new projects. This would have in turn meant the sidelining of existing beneficiaries. Therefore, there was occurred a crisis.

The inability to stabilize Muslim Brotherhood rule, because of both social and political pressures, encouraged many to publicly join the various parties of the NSF, which gave both direct and indirect support to the Tamarod Movement. It must be noted that this movement gathered millions of signatures, had deep popular roots, and gained a lot of momentum based on the anger in the streets. At the same time, however, there was room for a plan [or plot] regarding 30 June. The Armed Forces—according to various reports—were not far away. So you have a situation where they released a genie to use for limited goals: to remove Mohammad Morsi but not the socioeconomic policies in place, but in such a way where matters can be managed so as to guarantee stability.

This is the rhetoric that is now taking hold: the Muslim Brotherhood was the problem, and not their policies which represented a coup against the revolution; the Brotherhood and only the Brotherhood is the problem; thank God we are finished with the problem; and now is the time rebuild Egypt and return to economic vitality, all the while putting social movements in their place. This means that the metric of success for the new ruling coalition is its ability to impose the stability that is needed for its own success. In my opinion, this genie that was created—one which deposed the Muslim Brotherhood and now gives strength to the Armed Forces to design the transition plan—will itself claim that: it is the street that gives legitimacy; that anger in the streets is what gives fuel to any political development in the country; and if this anger, its demands, and its causes are not addresses, it is not going to go anywhere.

The alternative to this is mass repression of the popular movement. This is an existing danger, but even today there are voices from within the ruling coalition calling for concessions, or postponing the IMF loan, or (as it was doing yesterday) calling for sit-ins and street confrontations. So this is a ruling coalition that does not have sufficient unity so as to enforce a repressive grip. This is particularly so because this coalition is coming to power claiming to the United States and the [rest of the] international community that it draws legitimacy from the street. Consequently, the capacity to turn on the street through beatings and arrests is not going to be without its own set of risks. This is why there continues to be an opportunity for the genie that was let out on 30 June—which is primarily responsible for the fall of Morsi, and without whom this new ruling coalition could not have been established. This genie still exists, and its causes still exist. This is what opens up the possibilities, should there be a democratic revolutionary alternative created on the ground that has the capacity to have a say in the coming stage.

BH: We can say that there has been another political revolution on 30 June. But can we say that same about a socioeconomic revolution?

WG: I do not consider 30 June 2013 a revolution in the sense of 25 January 2011, as I think of it more of another wave of the January 25 Revolution like that which forced the Supreme Council of the Armed Forces (SCAF) to hand over power through elections. However, I believe that the heart of this political revolution is socioeconomic. It is this issue that allows the revolution to move from calling for the fall of Mubarak, to demanding the transfer of power from the SCAF to a civilian government, to insisting that the former regime candidate Ahmad Shafiq not win in the elections, and to bringing down Morsi with the power of the street. The fundamental question in the revolution is not just that of democracy, but also that it cannot be separated from the question of the redistribution of wealth. For these issues to be addressed in an acceptable manner to the people that went out into the streets, one has to address the two issues in a related manner such that the issue of redistribution is dealt with as a political issue. If democracy is going to be limited to elections every four years, people are going to continue to remain on the streets. Of course, in the end, nothing can be taken for granted. However, the structural causes for the persistence of the revolution are clear and remain in place.

BH: What do you think are some of the indicators that can give us a sense of what direction the political-economic situation is headed towards, in particular with reference to the relationship between the military and the business sector? I am here thinking of the government, but also some of the voices we are hearing—like that of Sawiris. What is the set of indicators that we should keep an eye on in the coming weeks and months, so that we may know in what direction the country is headed in, in terms of these issues in particular. Has the enormous space for control by capital expanded or contracted after 30 June?

WG: There are four or five fundamental issues since the January 25 Revolution. These will always be the indicators of the policies of a new government.

The first of these issues is wages, tax policy, and wealth redistribution. This is the question of who is the government championing. Part of the problem with respect to subsidies and public debt is the limited resources of the state. This is the case because state policies are antagonistic to the poor and privilege the rich. Therefore, you do not have taxes on the stock market or capital gains, and so forth. This is a primary issue, and area of inquiry. So if the policies continue as they are, then the direction is in that of the previous regime—which is what Neguib Sawiris is defending in his article.

Another issue has to do with subsidies, which is related to the first issue. We are told that what is happening is a restructuring so that wealth can better reach the poor. But in reality, this is about eliminating subsidies altogether. The call for restructuring subsidies is actually a demand of the revolution. This is because there is a significant amount of subsidies that go towards high energy consuming factories, fuel for the rich, and so on. Politically, this needs to be approached in such a way that does not encroach on the interests of the poor. Even the IMF claims that there must be a substitute form of support for the poor prior to these procedures being implemented. This has still not materialized, nor is anyone in Egypt talking about it. So this is the second issue, which has to do with subsidies.

There is also the issue of corruption and monopolies. Just like there is talk of transitional justice as it relates to the torture and killing of protesters (both before and after the fall of Mubarak), there is a need for transitional justice with respect to corruption and monopolies. This is an issue that the Muslim Brotherhood government did not take a single step towards. Quite the opposite. In one case, it appointed a person that was responsible for a dairy monopoly as minister of trade and manufacturing, which also raises the issue of a conflict of interest. This is another fundamental issue that can shed light on whether upcoming political-economic policies are in line with the revolution or not.

When talking about transitional justice, they are speaking about a rapprochement with businessmen. But we are not talking about rapprochement. We are talking about transitional justice. This is a deeper process, which involves the admission of crimes, accountability, and remedies to the negative effects that have accumulated over years. It also requires complete transparency, and guarantees that these issues will not be repeated. The truce they are [currently] doing has to do with confiscating part of the money made on such corruption, which ultimately does not address either the causes or the effects of corruption. In fact, it encourages corruption because it sends the message that the punishment for corruption is merely giving up the money made and being free to go.

The IMF loan is an extremely important issue, because it is in some ways a summary of all of these issues. When people speak about the IMF loan, they are not speaking about a loan to address a temporary fiscal problem. This is an issue that is related to the above policies. The position towards the IMF loan and the economic program that is premised on this loan [connection interrupted]. We have heard contradictory statements from this government, even if it is new and I should not judge it yet. On the one hand, we heard from the new minister of planning that negotiations with the IMF have been postponed. On the other hand, we heard from the minister of finance that the IMF loan is part of but not the entire solution. Ultimately, it is clear that the loan is on the agenda.

An important element of the IMF loan issue, which the new government does not seem to have a problem with, is the continuation of nontransparent foreign loans. We have heard a lot about estimated twelve billion dollars in grants and loans that the other Gulf states—as in Saudi Arabia, the United Arab Emirates, and Kuwait—have promised the new government. Just like the support that [previously] flowed from Qatar and Turkey, we do not know what the conditions of this support are, how it will be utilized, whether or not this is the best option at this particular time, and whether or not there is a political price to pay for it. The celebratory greeting by the government for this support is a negative indicator that shows the persistence of previous existing policies regarding foreign borrowing on the part of the SCAF and the Muslim Brotherhood. This is what Naguib Sawiris was talking about in his article, when he discussed collaboration between the private and public sectors, reducing the deficit as a goal of political-economic policies, and reinvigorating private sector and foreign direct investments—all without addressing the socioeconomic demands that are being voiced.

BH: I would like to conclude with what is perhaps a pessimistic question. Of course, political and social transformations are long-term processes that do not occur in a moment, within a day, or even in a year.What do we see in terms forces that might push in a progressive direction with respect to the political economy, anti-repression, anti-racism, anti-classism, and freedoms (both simple and complex)? Broadly speaking, the forces on the scene are divided into the Muslim Brotherhood and other Islamist parties, the military, the fuloul [remnants of the old regime], and liberals of all types. What we find is that those who are putting forth a truly progressive discourse opposed to all the above are limited [in number or effect] and outside of this constellation of groups. In other words, where are the progressive forces, which do not necessarily have to be socialist or leftist? These forces I listed, they are the ones on the ground. Certainly there are people like yourself and a number of others that present a genuinely progressive discourse. But in all honesty, what is their representativeness? Are we in a stage where these deep issues cannot be yet be resolved, and require waiting for a later stage? I ask because it is as if the social forces on the ground that represent these demands are relatively small.

WG: No, the social forces are quite large in size. In my opinion, the social forces that represent these demands are the broadest sector that exists today. I hear their voices often, and they are the ones that should be credited with 25 January, what came after, with the broad strike movement, and ultimately 30 June. They are the ones that should be credited.

However, there is a problem with the political representation of this sector. It has no weight in the transitional arrangements that are being made. [Brief interruption.] The problem is in the political representation of this broad-based social force. It is unorganized, it’s voice is weak, and it does not have a determinative weight in the arrangements of the transitional period. The Tamarod Movement succeeded in collecting signatures, proposed steps for the transitional period, and others had an interest in keeping them in the picture. But even then, its program was sidelined by the constitutional declaration of the interim president that was appointed by the army. Tamarod’s transitional period began with presidential elections, whereas presidential elections are coming at the end of the transitional period that is now in place. So the problem here is in political representation. [Bad connection.]

There are attempts by various revolutionary forces that have adopted a social justice platform. But this is a process that will take time, and it needs to be directly connected to the daily battles that are being waged by the broader social forces—which are holding on to their vitality. However, and this is in regards to the issue of pessimism, this does not mean that there is no capacity—even in the present circumstances—to make gains. When the president of the General Federation of Independent Unions is the minister of labor, there is room for reform. This is provided there is pressure applied on them for specific demands. So it would be an important gain if, by the end of this government, we secure a law of labor unions that supports independent unions for farmers, workers, fishermen, and others. These unions having a legal standing means they will have a voice that allows them to organize, ally with one another, and thus have political weight in future decisions. Therefore, there is a possibility for pressuring the ruling coalition. If you understand the balance of power in the ruling coalition, and are willing to take advantage of its lack of [internal] unity, then you can accomplish certain gains that give you more ground to stand on for the bigger struggles of the future.

BH: Thank you so much. I took much more of your time than expected. I apologize.

WG: It is not a problem. I only hope that it was a useful discussion.

BH: It was very useful. From what I understand, we should not be too pessimistic because there is a glimmer of hope. This is something I hope will be true. Next time, we will speak about the military-industrial complex, and the relationship between the military and the economy rather than just the business community. Thank you so very much.